Alabama corporatio, which applies manufacturing overhead on the basis of machine hours, has provided the following data for its most recent year of operations. Estimated labor hours were 3,900. Actual labor hours were 3800. Note that machine hours are used. Estimated manufacturing $137,080 Estimated machine-hours 3,800 Actual manufacturing overhead $137,000 Actual machine-hours 3,780 The overhead for the year was closet to: $641.47 underapplied $3,435 underapplied $732 overapplied $3,435 overapplied None of the above
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Alabama corporatio, which applies manufacturing
| Estimated manufacturing | $137,080 |
| Estimated machine-hours | 3,800 |
| Actual manufacturing overhead | $137,000 |
| Actual machine-hours | 3,780 |
The overhead for the year was closet to:
$641.47 underapplied
$3,435 underapplied
$732 overapplied
$3,435 overapplied
None of the above
Please show your work
Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine-hours
= $137,080/3,800 hours
= $36.073684 per hour
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